GROCERY SHOPPING ON LINE BECKONS, BUT WILL THEY COME? : FIRMS GO FORWARD IN NEW NICHE.

Byline: Kate Murphy The New York Times

Attention all grocery shoppers! Proceed to the nearest computer to take advantage of today's specials!

In at least 10 major metropolitan areas around the United States - from Boston to Atlanta to Los Angeles - supermarkets, like airlines and banks before them, are trying to lure customers over the Internet. On-line forms are replacing hand-scrawled shopping lists, software downloads replace shopping carts and automatic billing replaces scanners and checkout lines.

The concept of remote ordering, of course, is as old as the delivery boy, and every 20th century technology - telephones, faxes, even telexes - has, over the years, helped households buy food.

And though it is unclear how much opportunity there is in this particular niche of the grocery business, an industry with historically razor-thin profit margins, several firms are trying to make it work.

Thanks to the recent proliferation of on-line grocery services, some consumers have given up roaming the aisles at their local supermarket and order their provisions electronically. Peapod Inc. of Evanston, Ill., opened in 1990 and now has 45,000 customers spending an average of $100 an order.

Peapod and Shoppers Express Inc. of Bethesda, Md., which went on line last summer, establish exclusive, regional partnerships with grocery stores like Safeway and Kroger. Their employees - often retirees or housewives who make $5 an hour - go to the nearest store to fill customer orders.

Other services such as Streamline of Westwood, Mass., and All Things Delivered based in Bethesda, Md., stock their own warehouses. ``The industry is so young it's impossible to know which model is the most efficient and cost-effective way for getting goods to the consumer,'' said Ryan Mathews, editor of Progressive Grocer.

Hannaford Bros. Co., which has a chain of 140 supermarkets in the Northeast, is one such new entrant. Its venture, Homeruns, began in July and is described by its president, Thomas Furber, as a hybrid - sponsored by a grocery-store chain but fulfilling computer-generated orders out of a warehouse facility.

Homeruns' service area is Boston, where Hannaford has not established a retail presence. ``It's a way to penetrate a market without building new stores,'' Furber said. But, he added, ``It will take a while for most people to get comfortable grocery shopping with their computer.'' Like many of its competitors, Homeruns offers phone and fax ordering as another option.

The Web sites vary in the degree to which they mimic the actual shopping experience. There is no way to poke and prod produce in cyberspace, but Shoppers Express and Peapod allow customers to sort grocery items according to preferences ranging from price to fat content, or specify if they like their bananas green or their mangoes mushy.

The main attraction is convenience, said Fred Schneider, director of electronic commerce programs at Andersen Consulting in Chicago.

Goods are either delivered to the customer's home or bagged and ready for pickup free with a minimum purchase ($50-$60) or for a flat rate ($5-$9) plus between 5 percent and 10 percent of the total bill.

Industry analysts estimate that 1 percent of all grocery consumers currently use personal computers to do their shopping, but predict that as many as 12 percent to 15 percent will do so by 2005 as services become more established and a more technologically savvy generation comes of age.

Were those predictions to come true, they would represent $60 billion to $85 billion in revenue. But given the slim margins of the grocery industry at large - usually less than 1 percent - it is not clear what the profit picture might be. Some who are bullish on the concept, however, argue that profit margins can be increased because the on-line services do not have to pay overhead for stores.

Electronic shoppers also can get a look at each product's packaging and nutrition label. ``The computer gives people much more information and ways to organize that information than would ever be possible in a store or on the phone,'' said Alison Abraham, president of the privately held Shoppers Express which is in seven major markets: Los Angeles, Phoenix, Dallas, Atlanta, Seattle, Cleveland and Columbus.

Peapod, currently privately held but planning a public stock offering, operates in Boston, Houston, Dallas, Chicago, San Francisco, Atlanta and Columbus, Ohio.

To simulate in-store displays and promote impulse purchases, many services alert customers to current specials and manufacturers' coupon deals.

Still, many people ``really love doing their own grocery shopping,'' because it is a social and sensory experience, said Michael Sansolo, vice president of the Food Marketing Institute. ``Although there is a lot of potential in the electronic arena, it's hard to say what consumers will be willing to give up.''

After all, computers can't mimic the smell of baking bread or serve free chunks of cheese.

anyway.